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THE historic sale of NSW's power assets will raise as much as
$15 billion and help pay for a "new vision" for urban transport, a
European-style metro rail line, better country roads and improved
water management.

In a coup for the Premier, Morris Iemma, cabinet and caucus
voted to sell NSW's state-owned electricity retail companies and
lease its power generation companies to the private sector - and
use the money to launch big investment in ageing
infrastructure.

Mr Iemma stared down entrenched opposition in the Labor Party
and the trade unions by promising "transfer payments" - worth as
much as $40,000 - to all union employees who agreed to have their
jobs moved to the private sector.

The sale will help fund the building of the M4 East, from the
end of the M4 at Strathfield to near the western end of the Anzac
Bridge. It could include a linking tunnel to Sydney Airport and
Port Botany.

The Premier also indicated that up to $7 billion would be spent
on a metro-style subway. Details would be released early in the new
year, he said, but it is understood the preferred route is from
Malabar and West Ryde, running under congested Anzac Parade and
Victoria Road.

Regional water management and country roads will also benefit
from the windfall from the power assets. The $15 billion expected
from the sale will be held in an "intergeneration fund" managed by
State Treasury. About half of its expected annual income of $1
billion would be used to kick-start the spending plans, with the
balance to be reinvested in the fund.

The transfer payments for workers, likely to cost more than $40
million, helped to ease the privatisation proposal through cabinet
and caucus. As well, the Government has committed to extend to 2013
controls over electricity prices for consumers. The Independent
Pricing and Regulatory Tribunal will continue to set electricity
prices. These controls had been due to expire in 2010.

Mr Iemma said the cost of maintaining state ownership of the
power industry was prohibitive, leaving the Government with little
option. As much as $8 billion needed to be spent on new power
stations, he said, and up to $4 billion was needed to fit out
existing power generators with carbon-reduction technology. A
further $3 billion was needed to maintain the viability of
electricity retailers such as EnergyAustralia and Integral
Energy.

Cabinet met first thing in the morning followed by a lengthy
caucus meeting, which began soon after 11am. The caucus vote was
conducted by a show of hands. A push by the Left failed to win
support for a special state ALP conference on the issue.

It ended a 10-year stalemate after the former premier, Bob Carr,
and his treasurer, Michael Egan, failed to win caucus or union
support for the sell-off.

The Treasurer, Michael Costa, said the sale could be concluded
by the end of next year.

Still, union support is far from assured. The Unions NSW
secretary, John Robertson, from the Right, said if the sell-off
proposal failed to stack up against Labor policy he would not rule
out calling a special state conference.

"The unions remain opposed to the Government's proposal for
privatisation - firstly, because we don't believe it is good for
working families as consumers in NSW, secondly because it is not
good for the workers in the industry, and thirdly, this is a
government that has no mandate for privatisation of electricity in
NSW."

The Government wants private investors to build the next
baseload electricity station, which needs to be built by 2014.

The Opposition accused Mr Iemma of lying about the sell-off
before the election in March.

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